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Programme Overview

Productivity and innovation are at the centre of material wellbeing, but Europe in general and the UK in particular, have lower levels of measured productivity than the US, even after controlling for different inputs such as capital. And since the Great Recession of 2008, British GDP per hour (labour productivity) has actually fallen.

The programme addresses three major questions. First, what are the reasons for wide variations in productivity across firms and organisations even within narrowly defined industries? Second, looking particularly at the UK, why is the level of UK productivity (output per hour worked) still so far below its main comparator countries? Third, what is the reason for the UK 'productivity puzzle' - the slower growth of productivity in recent years?

We look at the performance of the UK over the last 30 years, especially under Labour and policies toward growth going forward in UK Economic Performance Since 1997: Growth, Productivity and Jobs. This work was taken forward by the LSE Growth Commission which reported in early 2013 on how to formulate and implement a long-term growth strategy in the UK.

LSE Growth Commission Book
Investing for Prosperity: A manifesto for growth

Investing for Prosperity Book Cover Edited by Tim Besley and John Van Reenen
September 2013
ISBN: 978-1-909890-02-2 | £19.99

This book, based on the work of the LSE Growth Commission and greatly expanding upon its first published report, argues that the UK should build on these strengths and proposes how we can address the inadequate institutional structures that have deterred long-term investment to support our future prosperity.

Watch Professor John Van Reenen, presents a 'manifesto for growth' for the UK economy over the next 50 years, backed up by the LSE Growth Commission's report:

Further information:
LSE Growth Commission Book

The LSE Growth Commission

Our most recent work on the UK productivity puzzle, emphasising the role of wage flexibility is The UK Productivity and Jobs Puzzle: Does the Answer Lie in Wage Flexibility? - published in the Economic Journal, 124, 433-452.

The programme examines the role of new technologies, management practices, investment, R&D, skills, competition and regulation of labour and product markets in shaping innovation and productivity. There is a strong focus on linking empirical findings to practical policy and economic theory.

The challenge of restoring productivity growth must also address the problem that faces all countries of managing climate change. An industrial revolution driven by the search for low-carbon technologies is likely to emerge as one of the most important areas for innovation in the coming years. Therefore, we also conduct research on 'Green Growth', studying mainly at the firm level, the determinants of emissions, evaluations of policy aimed at reducing emissions, effects of climate change on productivity, and drivers of clean innovation.

Our research can be broadly grouped into the following themes:

- Management Practices and Organisational Structures

- Drivers of Innovation

- New Technologies and Productivity

- Capital Investment

- Public Sector Productivity

- Green Growth

- UK Productivity Performance and Policy